U.S. companies face a steep new cost to hire global talent. An executive order sets a $100,000 fee on new H-1B visa applications, which tech and finance firms use to bring in skilled workers. The move could change hiring plans and speed the shift to AI and offshoring.
Fee, limits, and who pays
According to Reuters Breakingviews, the White House clarified the fee applies only to new applications, not existing visas. The restriction lasts 12 months unless extended. The order lets the Homeland Security secretary grant exemptions if it is in the national interest.
Indian nationals hold 71% of H-1Bs, but U.S. companies dominate the top 10 sponsors. Tata Consultancy Services is the second-largest user this year with 5,505 employees on the visas, half its 2021 peak. The measure adds cost pressure to outsourcing firms and to large U.S. employers like Amazon.com, Microsoft, Meta Platforms, and Apple.
Near-term profit impact looks limited. Reuters Breakingviews notes that even if the fee were retroactive, JPMorgan’s upfront cost would equal 0.4% of full-year profit. For TCS, it would be up to 10%. Spread across three to five years of a worker’s term, companies may still pay to secure top talent.
Faster AI adoption and offshoring
Companies are likely to respond in two ways. First, they can push more work offshore to India, the Philippines, and Mexico. The pandemic proved many tasks do not require on-site teams, though projects still need a core group close to the work.
AI to meet staffing gaps
Second, firms may speed up the use of artificial intelligence. A team that once needed 10 H-1B workers might hire five and use recent AI tools to fill the gap. That would run counter to the goal of pushing companies to hire more American STEM graduates.
Donald Trump has shifted positions on H-1B over time. The new order includes loopholes that offer flexibility to blunt the impact. It could end after one year unless Washington extends it.
Breakingviews argues that the bigger risk is long term. America has relied on both local and overseas talent. A sustained anti-immigration drive would carry a heavy cost for the economy and for companies seeking the best people.
